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RURAL HOSPITALS
2023 Update: The federal government rolled out a new payment model on January 1st aimed at helping America’s struggling rural hospitals survive, but with a catch: They must agree to drastically reduce their inpatient services. Rural hospitals want funding help without a requirement to slash inpatient services. Hospital administrators say the unusual condition has them stuck between a rock and a hard place — balancing community needs for inpatient care against their facility’s long-term viability. More than 600 rural hospitals, representing nearly 30 percent of all rural hospitals nationally, are at risk of closing in the near future because of persistent financial losses on patient services, inadequate revenue to cover expenses and low financial reserves, according to a recent study by the nonprofit Center for Healthcare Quality and Payment Reform.
According to a report issued February 24, 2021, by the American Hospital Association (AHA), American hospitals and health care systems will lose between $53 and $122 billion in revenue in 2021, mainly due to Covid-19 and reduced numbers of patients. In 2020, hospitals lost an estimated $323 billion in revenue.
“When we talk about the historic financial challenges hospitals face, it’s about more than dollars and cents, it’s really about making sure hospitals and health systems have the resources needed to provide essential services for their patients and communities,” said Rick Pollack, AHA president and CEO, in a statement.
“During the pandemic, people have put off needed care, in some cases to the detriment of their health. In addition, the costs of labor and supplies have increased, adding to financial stress. Vaccines give us hope that the end is in sight, but hospitals need additional support to continue to provide access to care and to help get as many vaccine shots into arms quickly.”
For rural hospitals, the AHA said, financial challenges present a greater risk.
Rural hospitals serve as “economic anchors,” providing employment, buying from other local businesses and attracting new businesses. But they tend to have fewer patients, more of whom are on Medicare or Medicaid, which pays less than commercial insurance providers. The loss of a rural hospital is more than just the loss of healthcare access, the organization said. It could mean the loss of an area’s largest employer and consumer.
The AHA is asking Congress to add $35 billion to President Joe Biden’s “American Rescue Plan.” Currently, there is no help for hospitals in the $1.9 trillion stimulus plan. But the AHA says that money is critical to hospitals’ and health care systems’ financial health. With only about $4.4 billion left in provider relief funds from the CARES Act, hospital organizations say any new stimulus package should include direct, targeted assistance.
Relative to urban areas, the roughly 61 million Americans who live in rural areas have a higher rate of poverty, unemployment and are more likely to be uninsured.
These communities are shrinking. Fewer patients means less money coming in to rural hospitals. Fewer patients with insurance typically means hospitals must cover a lot of uncompensated care. Even if a patient has Medicare or Medicaid, hospitals aren't paid as much as they would be with a privately insured patient; private insurers pay nearly double what Medicare pays for all hospital services.
RECENT STUDIES:
Rural Hospitals At Risk of Closing PDF (Center For Healthcare Quality & Payment Reform)
REPORTS
Persistent Financial Pressure on Hospitals & Health Systems Could Threaten Patient Access to Care (American Hospital Association, 2-24-21)
NEWS LINKS
Rural Hospitals Say They Are Stuck Between a Rock and a Hard Place (The Washington Post, 1-17-23)
How the pandemic killed a record number of rural hospitals (CNN, 7-31-21)
Rural Hospitals Risk Closure Due to Covid-19-Related Drop in Revenue in 2021 (Daily Yonder, 3-1-21)
NURSING HOMES
The American Health Care Association and National Center for Assisted Living (AHCA/NCAL), representing more than 14,000 nursing homes, assisted living communities and other long-term care facilities across the country, announced the release of a recent survey of providers across the U.S. Results from the survey showcase the urgent need to address the economic crisis facing the profession.
More than 1,600 nursing homes could close this year as a result of mounting financial challenges.
Only a quarter of nursing homes and assisted living communities are confident they can last a year or more.
More than half of nursing homes and nearly half of assisted living communities say their organization is operating at a loss.
Read more at the news link below.
REPORT
Nursing Homes Face Imminent Closures Without Financial Support from Congress (AHCA, 4-8-21)
RELEVANT LINKS
Only a quarter of nursing homes confident in making it through 2022 (Message Media, 7-22-21)
Justice and Change for Victims of Nursing Facilities! (Facebook)
HOSPITALS ARE FACING BILLIONS IN LOSSES
A report released in the fall of 2022 stated that hospitals were facing billions in losses. These losses are significant compared to pre-pandemic levels. The report also stated that hospitals are facing a host of other related challenges, including workforce shortages, supply disruptions, and rising expenses. Pessimistic projections for 2022 showed a 133% decline in operating margins compared to 2019 levels. Expenses were projected to be $135 billion over the previous year.
Financial analysts have said that 2022 may have been the worst year for hospital finances in decades. Yet 2023 looks like it will be another year of financial underperformance, with rural providers in especially dire circumstances.
Tell Medicare/Medicaid: Hospitals should protect us from Hospital-Acquired COVID (CDC, 5-22-23)
2022 Was Hospitals’ Worst Financial Year in Decades, But 2023 Won’t Be Much Better (MedCity, 1-2-23)
Hospitals face billions in losses this year (Health Exec, 9-16-22)